Request Received: 10 May 2022
Responded: 17 June 2022
Q. Can you please detail and advise the drivers behind the 3.9% tax demand increase from last year figure.
A. In response, I have attached a document that was presented to the 27/01/2022 meeting of the Police and Crime Panel for their consideration, which should contain all the information sought. In addition, the following pre-prepared summary may prove to be helpful:
The Commissioner has asked me to respond to you on his behalf with a more detailed explanation of the thinking behind the decision to raise this year’s precept by 3.85%, equivalent to £9.75 on an average Band D property.
Firstly, I should explain that the way police services are funded comes from a mixture of grants from central government (in Warwickshire this amounts to around half of the budget) and funding raised locally through Council Tax, with this element known as the Police Precept. Police and Crime Commissioners (PCCs) have the power to raise, lower, or freeze the Police Precept subject to a limit that is imposed by Central Government. PCCs do not have any control over the portion they receive from the national funding pot, though the Warwickshire Commissioner has lobbied for a fair funding settlement for rural forces, as have other PCCs nationally.
Setting of the budget requires the Commissioner to balance the needs of the force and the increased costs of providing core services against the backdrop of an expanding population creating more demands on policing. He also must ensure that the priorities that the public signal are important and form the basis of the Police and Crime Plan are being met, while also acknowledging the challenging financial circumstances many households face now and into the future.
With the amount of central funding fixed, the only lever available to Commissioners to increase resources if required is either to require savings from the force (which would likely lead to a diminished service to the public), spend reserves, or borrow money to support the budget. The latter two options are not sustainable, since reserves can only be used once and in any case will be at levels close to the minimum that would be prudent once existing capital spending is taken into consideration. Likewise, borrowing is not a sustainable strategy for the long term and comes with its own associated costs. Therefore, the Commissioner has been determined to set a balanced budget which sees the force’s costs covered using only the income that is received.
Due to the timings of the budget cycle this year, the Commissioner had to propose an initial budget before the full extent of the council tax base (the number of households paying Council Tax) was known and ahead of the declaration of collection surpluses or deficits from the district and borough councils.
To meet the constraints outlined earlier, the Commissioner originally proposed a precept increase of £9.99 for a Band D property for 2022/23 to the Police and Crime Panel at their meeting on the 27 January 2022. He provided a full and detailed report outlining the 2022/23 draft budget, including the capital programme, Medium Term Financial Plan and reserves position, based on a £9.99 band D precept increase.
The Panel reviewed the proposed precept and chose not to support the proposed increase for 2022/23, exercising their right to veto, by issuing a report to the PCC on the 3 February 2022.
Following the 27 January Panel meeting, final confirmation of the police funding settlement, the collection fund surplus/deficit information and the council tax base positions for each authority has been received, this has enabled the 2022/23 budget to be finalised. No further changes in the core government grant have been notified, but districts and boroughs have confirmed an improved position against the draft budget with a total net collection fund surplus of £0.470m and council tax base of 215,689. The draft budget had included an estimated collection fund surplus of £0.279m. The revised actual collection fund surplus therefore represents an additional £0.191m. This is one-off money.
Based on a precept increase of £9.75, the increased council tax base will generate an additional £0.233m of base line funding, compared to the draft budget previously presented to the Panel. This additional funding has provided the Commissioner with the flexibility to make changes to the 2022/23 funding arrangements.
Therefore, in response to the Panel’s concerns along with the final confirmation of the council tax base, the Commissioner proposed to make a reduction in the precept increase, from £9.99 to £9.75. This would equate to a rise of 3.85%, which is further below the rate of inflation than the original proposal.
The Commissioner acknowledges that any increase in costs for public services are difficult in a time of increases in the daily costs of living, but notes that these challenges affect businesses as well as residents.